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Magic Leap purchased a startup founded by former Apple employees, and looked into buying an Oscar-winning animation studio

Steven Tweedie and Kif Leswing
Rony Abovitz, CEO of augmented reality startup Magic Leap, waves during the first day of the annual Allen and Co. media conference in Sun Valley, Idaho July 8, 2015. REUTERS/Mike Blake

(Rony Abovitz, CEO of augmented reality startup Magic LeapThomson Reuters)

Magic Leap is beefing up its ranks with artists and animators from an Oscar-winning studio and veteran game designers, in a sign that the $4.5 billion company believes content could play a critical role in the success of its highly-anticipated "mixed reality" product.

Magic Leap's special glasses, which overlay detailed digital imagery on top of the real world, have wowed the tech industry's leading personalities and attracted healthy investments from Google and Qualcomm, among others. 

Magic Leap is expected to ship some form of its headset later this year, at a price between $1,000 - $2,000.

But even as Magic Leap continues to work on perfecting its hardware, the startup has concluded that it will need plenty of breathtaking content for consumers to experience once they put on its glasses. 

That's one of the reasons why Magic Leap purchased FuzzyCube Software, Business Insider has learned, and looked into buying an Oscar and Emmy winning animation company called Moonbot Studios in the fall. The acquisition talks with Moonbot didn't lead to a sale, but Magic Leap did end up hiring around a dozen of its artists and animators, who now work out of Magic Leap's Florida headquarters.

FuzzyCube Software, the smaller of the two studios, is based out of Dallas, Texas, and was founded by former Apple employees, including Jeff Ruediger. A creator of casual iPhone and iPad games including "BoomTown!!" and "Chemo Calc," the founders have also worked in the games industry on projects like "Halo Wars" and "Age of Empires 3."

The FuzzyCube team was first connected to Magic Leap through Magic Leap's chief creative officer, Graeme Devine, who left Apple in 2010. The team knew Devine from their time at Apple. After Magic Leap purchased the startup in the spring of last year, the developers joined Magic Leap's larger content group, which employs hundreds of animators, artists, and developers. The price of the acquisition could not be learned, but was probably relatively modest given that the company's team was less than ten employees. The FuzzCube team continues to work out of Dallas.

Fantastic flying books and complex talks

Magic Leap also explored a larger acquisition with Moonbot Studios, a highly esteemed animation company that employed around 50 artists and animators when the talks with Magic Leap began. The animation studio's "The Fantastic Flying Books of Mr. Morris Lessmore" won the Academy Award for Best Animated Short Film in 2012, and the studio made the Oscar short list again in 2014 for its short film "The Numberlys." That same year, Moonbot Studios won two Emmy Awards for a commercial it made for Chipotle called 'The Scarecrow."

Brandon Oldenburg Flight School Moonbot Studios William Bill Joyce

(Moonbot Studios cofounders William Joyce and Brandon Oldenburg accept the Oscar for Best Animated Short Film.Getty/Kevin Winter)

But with its funding from private investors — including the oil company Anderson Oil — used up, Moonbot and Magic Leap discussed a potential acquisition in late 2016, multiple sources at the company and those familiar with the talks told Business Insider. Magic Leap's CEO and founder Rony Abovitz is a fan of the studio and its work, according to sources at Magic Leap.

A source familiar with the talks cited "complex" issues with Moonbot's intellectual property as a potential reason the talks didn't solidify into a sale. Magic Leap and Moonbot both declined to comment.

Cheaper by the dozen

Instead of an acquisition, Magic Leap hired about a dozen Moonbot artists and animators — none of which included Moonbot's three cofounders — and Moonbot Studios went through a round of layoffs, leaving its cofounders with a small crew.

Since the Magic Leap deal talks, Moonbot has been quietly building up a new studio called Flight School, which will launch soon. Moonbot Studios has been "dissolved," according to multiple sources, and Flight School will be led by Moonbot cofounders Brandon Oldenburg and Lampton Enochs. Moonbot's third cofounder, William Joyce, still owns some of Moonbot's IP, and will not be a part of Flight School.

"Honestly, I believe Bill Joyce will revive Moonbot," a Moonbot source told Business Insider. The source also said that Moonbot handled everything "honorably."

Moonbot's new endeavor, Flight School, will be a unique entity and has partnered with Reel FX, an animation studio cofounded by one of Moonbot's three cofounders, Brandon Oldenburg. The new studio will create both virtual and augmented reality games and experiences, and "ultimately mixed reality."

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